Fundrise launches $500M Opportunity Zones fund

The crowdfunding startup is targeting a federal program providing tax incentives for investment in distressed areas

National /
Jul.July 20, 2018 02:30 PM

Fundrise co-founder Ben Miller. Opportunity Zones pock South Los Angeles

A crowdfunding startup is launching a $500 million investment fund to focus on developments in distressed areas that the federal government has made eligible for generous tax break.

Washington, D.C.-based Fundrise plans to start its Fundrise Opportunity Fund next week. It wants to raise its target amount by the end of 2019, according to Bloomberg. The company specializes in small investments, with the minimum investment for the fund set at $10,000.

The fund will target the government’s Opportunity Zones program, created under the most recent federal tax overhaul. It allows investors to defer capital gains tax until 2026 if they invest those gains into construction projects in economically depressed areas.

The government designated Opportunity Zones in 18 states in April, from as small as just a few blocks in New York City to entire municipalities in rural states like Kansas. Miami is also included in the zones. The projects have to be new construction or include “substantial rehabilitation” to qualify.

The Economic Innovation Group, a Washington-based nonprofit, estimates that U.S. investors have around $2 trillion in unrealized capital gains from stock and mutual funds and available to them.

Fundrise told Bloomberg it will first focus on metro areas, including Los Angeles, Seattle, Washington, Atlanta, and the San Francisco Bay area.

It’s one of first firms out of the gate to move forward with an Opportunity Zones investment fund, but many other companies and banks are drawing up their own plans to take advantage of the program.

There is some risk involved. The government hasn’t yet provided clear tax and legal guidance on the program, which could limit deferment claims.

The program could prompt major change in areas deemed Opportunity Zones, and has been criticized by some as providing fuel for gentrification. Some say that developers will use the program to skirt taxes on projects they had already planned. [Bloomberg] — Dennis Lynch 


Related Articles

arrow_forward_ios
Census tract 135 and Stellar Management's Larry Gluck (Credit: Getty Images and Stellar Management)
How a small stretch of land on the Far West Side became an Opportunity Zone
How a small stretch of land on the Far West Side became an Opportunity Zone
CrowdStreet CEO Tore Steen and vice president Darren Powderly (Credit: CrowdStreet and iStock)
Crowdfunding platform launches $20M Opportunity Zone fund
Crowdfunding platform launches $20M Opportunity Zone fund
With a cooling trade war, stocks perform well, including real estate. (Credit: iStock)
Real estate stocks push up this week as U.S.-China trade tensions ease
Real estate stocks push up this week as U.S.-China trade tensions ease
Joshua Burrell and excerpts from the court document (Activated Capital, United States District Court)
Manhattan investor charged in Opportunity Zone fraud
Manhattan investor charged in Opportunity Zone fraud
Broad Street Development, Invesco refi 80 Broad for $150M
Broad Street Development, Invesco refi 80 Broad for $150M
Broad Street Development, Invesco refi 80 Broad for $150M
CMBS issuance is set to break Great Financial Crisis record, report
CMBS set to break Financial Crisis record
CMBS set to break Financial Crisis record
Signature Bank CEO Joseph DePaolo (Signature Bank, iStock)
Signature Bank reports record results
Signature Bank reports record results
Hudson Yards (Getty, iStock)
City’s bet on Hudson Yards beginning to pay off
City’s bet on Hudson Yards beginning to pay off
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...